Discussion

After reviewing below ppt’s, prepare a 500-word synopsis of the legal, ethical, and social concepts and issues discussed in the chapters.
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CHAPTER 19
MANAGEMENT OF EMPLOYEE WELFARE
For up-to-date legal and ethical news, go to mariannejennings.com.
LECTURE OUTLINE
Use opening CONSIDER 19.1 to pique students’ interest.
See Exhibit 19.1 and PowerPoint Slide 19-1 to summarize existing federal laws on employee welfare.
19-1 Wages and Hours Protection
19-1a
The Fair Labor Standards Act (FLSA) (See PowerPoint Slides 19-2, 19-3, and 19-4)
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Often Called “The Minimum Wage Law”
Coverage
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Businesses engaged in interstate commerce
Businesses engaged in production of goods to be shipped in interstate commerce
Businesses engaged in interstate shipping
Expanded to cover business enterprises with gross income of $362,500 or more
Exemptions
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Independent contractors
Agriculture, fishing, and domestic service
White-collar management
Executive, administrative, and professional people
FLSA minimum wage and overtime regulations
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Graduate increases in minimum wages
Time-and-one-half pay for overtime (over 40 hours)
White collar, professional, administrative employees are exempt
New rules have created a great deal of ambiguity
Under new Department of Labor regulations, applies to employees who work 40
hours/week and earns $47,476/year or less
FOR THE MANAGER’S DESK – HOW UBER, LYFT, HOME HEALTH CARE, AND NEW BUSINESS
MODELS ARE CHANGING EMPLOYMENT LAW: Discuss IRS standards and the types of factors that
influence independent contractor status and multiple-employer situations.
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FLSA and Child Labor Provisions (See PowerPoint Slide 19-5)
381
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382
Part IV
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Business Management and Governance
Age 18 and over – any jobs
16-17 – any nonhazardous job (hazardous – mining, logging, roofing, excavation)
14-15 – any nonhazardous, nonmanufacturing, and nonmining job during nonschool
hours; limits on hours
Recordkeeping – employers must keep records of hours and wages; fines for not doing
so
Child actors are subject to strict Screen Actors Guild rules
FOR THE MANAGER’S DESK – MANAGING AND PAYING INTERNS: Discuss with the students the
various holdings and combine the discussion with the ethical issues. Some questions to ask on these two
features:
Why do internships exist?
What are the benefits for the company?
For the students?
What about internships for academic credit?
What about the long hours?
What effect will the litigation have on internships going forward?
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Enforcement of FLSA (See PowerPoint Slide 19-6)
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Penalties for FLSA Violation (See PowerPoint Slide 19-7)
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Can begin by complaint filed with U.S. Labor Department
Employer can seek interpretation from Department of Labor
Labor Department can initiate its own investigation
Fines – $10,000 first conviction
$10,000 and/or six months for second violation
Employees can’t be fired for reporting violations
Liability for FLSA Violation
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Corporation is liable
Officers can be held individually liable
See PowerPoint Slide 19-8.
CASE BRIEF 19.1
Chao v. Hotel Oasis, Inc.
493 F.3d 26 (1st Cir. 2007)
FACTS: Hotel Oasis, Inc. operates a hotel and restaurant in southwestern Puerto Rico. Dr. Lionel LugoRodríguez (Lugo) is the president of the corporation, runs the hotel, and manages its employees. Oasis’s
records show that between October 3, 1990 and June 30, 1993, employees were paid less than minimum wage,
were not paid for training time or meetings held during non-working hours, were paid in cash “off the books,”
and were not paid correctly for overtime. Oasis also maintained two sets of payroll records for the same
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use
as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning
management system for classroom use..
Chapter 19
Management of Employee Welfare
383
employees, covering the same time periods, one showing fewer hours at a higher rate, and the other showing
more hours at a sub-minimum wage rate. Lugo maintains that the two sets of books were necessary, one for
temporary employees and one for permanent employees.
On April 5, 1994, the Secretary of Labor (the “Secretary”) filed a complaint in the United States District Court
for the District of Puerto Rico against Oasis and Lugo (“Defendants”), alleging violations of the minimum
wage, overtime, and recordkeeping provisions of the Fair Labor Standards Act (“FLSA”). The Secretary also
sought liquidated damages.
After years of litigation, On June 21, 2005, the district court ordered Oasis to pay $141,270.64 in back wages
and an equal amount in liquidated damages to 282 current and former employees. The court also found Lugo
personally liable for the back wages and penalties. Lugo and Oasis appealed.
ISSUE ON APPEAL: Was a finding of an FLAS violation correct? Can an officer be held liable for such
violations?
DECISION: Yes. Oasis and Lugo are both liable. The violation was willful, as evidenced by the two sets of
books. Also, Lugo was in a position of control. He was an owner and did much of the managing. Under those
circumstances he would be personally liable. Under the FLSA, an “employer” is “any person acting directly or
indirectly in the interest of an employer in relation to an employee.” The First Circuit has followed the
Supreme Court’s lead in interpreting this definition pursuant to an “economic reality” analysis. Accordingly,
there may be multiple “employers” who are simultaneously liable for compliance with the FLSA.
Answers to Case Questions
1. What shows willfulness of a violation? There were the two sets of books with misrepresentations about
hours worked, always in favor of the company.
2. What are the standards for holding an officer liable for FLSA violations? The officer must have a
controlling interest or be involved in the management of the work force and have some control over the
schedule and hours or be aware of the pay policies and the books and records.
3. Explain what liquidated damages are and when they are available for recovery. Liquidated damages are
damages equal to the amount of wages recovered that are recoverable when the Department of Labor is
able to show that there has been a willful violation of the FLSA.
19-1b
The Equal Pay Act of 1963 (See PowerPoint Slide 19-9)
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Illegal to pay different wages to men and women doing the same jobs
Equal Pay Act is not a comparable worth statute
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Comparable worth requires equal pay for jobs that require equal skill, effort, and
responsibility
Test case came from Washington when a licensed practical nurse discovered she
earned less than the groundskeeper at a state hospital and less than men doing similar
jobs in the prisons; trial judge found discrimination and ordered back pay but
decision was later reversed
Presently, federal standards do not require comparable worth
Merit and seniority systems are exceptions
19-2 Workplace Safety
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use
as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning
management system for classroom use.
384
Part IV
19-2a
The Occupational Safety and Health Act (See PowerPoint Slide 19-10)
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Passed to ensure workplace safety precautions
OSHA was agency created to enforce it
OSHA coverage and duties (See PowerPoint Slide 19-11)
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Employers covered – all with one or more employees
Basic responsibilities
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19-2b
Know and follow OSHA’s rules
Inspect for hazards and correct them
Post employee rights
Keep records of injuries
Post OSHA citations
OSHA Responsibilities (See PowerPoint Slide 19-12)
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Promulgating rules and safety standards
Can award variances for certain employers
Inspections
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Either voluntary or require warrant
Surprise element still preserved even with warrant
Employees can accompany an OSHA inspector
Employees can file complaints
Right to notice if employer applies for variance
OSHA penalties
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Have targeted industries (roofing, lumber)
Also have random inspections
Cannot retaliate against employee who notifies OSHA and requests an inspection
OSHA search warrant requirement
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See Exhibit 19.2 and PowerPoint Slides 19-13 and 19-14 – fine and imprisonment
escalate with seriousness of violation
Citation is first step
Many employers negotiate a consent decree after a citation
If no consent decree, there is a hearing before an administrative law judge (ALJ)
ALJ makes recommendations and OSHRC decides
Can then appeal to a court
State OSHA programs (See PowerPoint Slide 19-15)
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19-2c
Business Management and Governance
States share responsibility for safety with feds
Secretary of Labor must approve state’s plan
Employment Impairment and Testing Issues (See PowerPoint Slide 19-16)
If safety is an issue, U.S. Supreme Court has authorized testing
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use
as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning
management system for classroom use..
Chapter 19
Management of Employee Welfare
385
19-3 Employee Pensions, Retirement, and Social Security
19-3a
Social Security
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Social Security Act of 1935 (See PowerPoint Slide 19-17)
Every employee, who is not an independent contractor, contributes to Federal Insurance
Contributions Act (FICA)
Benefits under Social Security depend on work and salary range
FOR THE MANAGER’S DESK – THE GIG ECONOMY START-UPS: PUMPING THE BRAKES ON
INDEPENDENT CONTRACTORS AND MOVING TO EMPLOYEES: Discuss the trade-offs in the piece –
higher compensation, but no benefits and no FICA paid in. Less regulation, more control over your income;
deductibility of expenses – less stability; termination is easier. Flexibility for employees is higher. It is
difficult to impose the old business regulatory model on what has become a very different business and
economic structure.
19-3b
Private Retirement Plans (See PowerPoint Slides 19-18 and 19-19)
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Employment Retirement Income Security Act (ERISA)
Coverage of ERISA: applies to employers in interstate commerce
Applies to medical, retirement, or deferred income plan
Requirements under ERISA
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Employee rights under ERISA: get vesting rights in their pensions
FASB 106, Retirees and Pensions – Requires corporation to expense cost of benefits for
retired employees
Pension Protection Act of 2006 (See PowerPoint Slide 19-20)
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19-3c
Must give employees an annual report
Must disclose loans made from the fund
ERISA does not require pension plans; it only regulates employers who offer them;
levels of responsibility have caused some employers to drop the plans
Imposes new funding requirements
New disclosure requirements
Unemployment Compensation (See PowerPoint Slide 19-21)
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Benefits provided
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States determine amount
States’ rules on minimum and maximum
States’ rule on length
Qualifying for benefits
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Must have been involuntarily terminated
Must be able and available for work
Must be seeking employment
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use
as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning
management system for classroom use.
386
Part IV
Business Management and Governance
ANSWER TO CONSIDER 19.2: Gupta cites to the Still v. Commissioner of the Dept. of Employment &
Training, supra, to support his claim that the DET did not properly weigh a mitigating factor – namely, the
dealer’s “ethnic slur” (“you stupid Indian”) – which, he claims, must be viewed as negating his intent to engage
in “deliberate misconduct.” He contends that Lightbridge’s expectation that he and other employees would
never be rude to callers was unreasonable in a situation in which an employee is provoked by a caller’s ethnic
insult. He argues that his curt response to the dealer – “Hold on, you idiot” – was not a purposeful action, but
rather, as in Still, an unintentional, spontaneous, emotional reaction to the insult, so that he could not be found
to have to possessed the requisite state of mind for which he could be disqualified from receiving
unemployment benefits. Contrary to his argument, the review examiner carefully considered the dealer’s
language but found it insufficiently mitigating in the circumstances. Moreover, Gupta’s reliance on Still is not
only unavailing, but is undermined by that case.
In Still v. Commissioner of the Dept. of Employment & Training, 423 Mass. at 807, 672 N.E.2d 105, the court
considered whether a nurse, who had been discharged for obscenely swearing at a patient in violation of her
employer’s stated rule, could be disqualified from receiving benefits under the “knowing violations” prong of
G.L. c. 151A, § 25(e)(2). The court determined that because the nurse’s outburst was provoked by the patient’s
ugly racial slur after she had been performing her job under extremely stressful circumstances on that day,
largely because of that specific patient, she had not “knowingly” violated the employer’s rule, but had
emotionally reacted on the spur of the moment without real awareness. The court, however, additionally
concluded that “mitigating circumstances alone will not negate a showing of [disqualifying] intent,” and was
careful to limit the reach of its decision by stating that “an employee who violates an employer’s policy by
using abusive language, with conscious awareness of the act, and its probable consequences, has committed a
‘knowing’ violation, regardless of circumstances or prior work history.” Ibid. The court further observed, in
language that plainly distinguishes the unique facts in Still from Gupta’s case, that “if the act occurred in
response to provocation, or while the employee was under extreme stress, and the employee had never
committed such an act previously, a factfinder might reasonably conclude that the employee had in fact acted
unintentionally. Conversely, if the employee had used abusive language previously, and had been warned of
the consequences, this might indicate to the factfinder that the latest violation was intentional.”
In contrast to the situation in Still, the employer’s evidence here established that Gupta had in fact been
insulted and provoked by other callers in the past but had been able to refrain from rude responses in each
incident. Furthermore, as noted above, he had on at least two prior occasions engaged in rude behavior toward
customers whom he perceived to be insulting and had been notified, verbally and in writing, that such behavior
violated Lightbridge’s policy and expectation that all employees were required to treat callers in a courteous
and professional manner in all circumstances and could result in termination if repeated. Despite these prior
warnings, he responded to a customer’s verbal abuse during the August 17th incident with a rude remark (but
also by seeking a supervisor, thereby confirming his recognition of the employer’s policy). The review
examiner correctly concluded that, although Gupta had been insulted by the caller, “he could easily have
averted this situation by putting the caller on hold without the rude remark.”
We acknowledge the possibility that there may be circumstances in which a racial or ethnic insult is so vile and
provocative that, even if an employer has the right to demand superhuman restraint from the employee who is
its target, the employee who responds to it in like fashion would not necessarily be deemed to have engaged in
deliberate misconduct or to have acted in willful disregard of his employer’s interests. Cf. Still v.
Commissioner of the Dept. of Employment & Training, supra. Compare G.L. c. 151A, § 74 (unemployment
compensation statute is to be construed liberally to achieve its purpose); Howard Bros. Mfg. Co. v. Director of
the Div. of Employment Security, 333 Mass. 244, 248, 130 N.E.2d 108 (1955) (general purpose of the statute is
to pay benefits to “persons who are out of work … through no fault of their own”). This, however, is not such a
case. Upon examination of the record before the review examiner, we are persuaded that the DET’s denial of
Gupta’s unemployment benefits for having engaged in “deliberate misconduct” that disregarded (and in fact
harmed) his employer’s interest was amply supported by substantial evidence. Gupta v. Deputy Director of
Div. of Employment & Training, 818 N.E.2d 217 (Mass. App. Ct. 2004).
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use
as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning
management system for classroom use..
Chapter 19
Management of Employee Welfare
•
387
Who pays for unemployment benefits?
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States administer the program
Funds deposited with state
19-4 Workers’ Compensation Laws
? Compensation for Work-Related Injuries
? Principles of Workers’ Compensation (See PowerPoint Slides 19-22 and 19-23)
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19-4a
Employees injured in scope of employment are covered
Fault is immaterial
Independent contractors are not covered
Benefits include expenses, lost wages, and injury compensation
Employees do not have right of common law suit
Third parties can be sued to indemnify employers
Administrative agency handles program
Every employer must carry insurance or be self-insured
Employee Injuries (See PowerPoint Slide 19-24)
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Primarily accidental injuries covered
Definition has been expanded
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Back problems from lifting
Medical problems – heart attacks and nervous breakdowns
Stress
Co-worker injury
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Covered if arises in scope of employment
Issue of rape is a problem; employer can be sued for the failure to screen employees
adequately
19-4b
Causation and Worker’s Compensation
19-4c
Fault is Immaterial
In workers’ comp fault is immaterial (employee can even disobey instructions and be
compensated)
19-4d
Employees versus Independent Contractors
Independent contractors are not covered
19-4e
Benefits (See PowerPoint Slide 19-25)
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Lost wages
Medical expenses
Disability benefits
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Partial disability – listed on schedule by rate
© 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use
as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning
management system for classroom use.
388
Part IV
Business Management and Governance
Example: 50 percent of wages
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19-4f
Total disability – generally 2/3 of salary
Unscheduled injuries are determined by board
Death be …
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